Pursuant to a search under FERA, the premises of the appellant were searched on 11.4.1989. Foreign currency was recovered though no incriminating material was found. In his statement recorded on the same day, the appellant confessed to indulging in various foreign exchange transactions. One Mr. Narendra Mirani also confessed that the foreign exchange seized from him during the search was purchased by him from the appellant and the rates of purchase were given. The appellant was arrested on 12.4.1989 and on 14.4.1989 he filed an application before the Magistrate and retracted the confessional statement on the ground that it was false and obtained under duress. Narendra Mirani also retracted his confession. It was argued that as, except the retracted confessional statement of the appellant and Narendra Mirani, there was no material to establish the charges against the Appellant, the conviction was illegal. On appeal, HELD, dismissing the appeal:

(1) The effect of Vinod Solanki vs. UOI (233) ELT 157 (S.C.) is that in criminal or quasi criminal proceedings, a person accused of commission of offence under FERA has not to prove to the hilt that confession has been obtained from him by inducement or threat by the person in authority. However, when confession had been retracted, the Court must bear in mind the attending circumstances and other relevant factors to come to conclusion whether the confession was voluntary and was not obtained by any inducement, threat or force. At the same time, mere retraction of the confession may not be sufficient to make confessional statement irrelevant for the purpose of quasi criminal proceedings and the Court is obligated to take into consideration the pros and cons of confession and retraction made by the accused.

(2) The effect of K.I. Pavunny vs. AC (90) ELT 241 (S.C.) is that if a confessional statement is retracted, the Court is required to examine whether it was obtained by threat, duress or promise and also whether the confession is truthful. If it is found to be voluntary and truthful inculpatory portion of the retracted confession can be acted and even conviction can be based upon the same. However, prudence and practice require that in case of retracted confession Court should seek assurance by way of corroboration from other evidence adduced. A general corroboration is sufficient.

(3) On facts, the appellant took more than two days to retract the statement even after production before the Magistrate. There is no plausible explanation retraction was not done at first available opportunity. Further, foreign exchange was recovered and when asked to explain the same, confessional statements were made by the appellant and Narendra Mirani. The confessions accordingly stand corroborated by the foreign exchange. In these circumstances, the confessional statements cannot be said to be made under force, duress, coercion or because of inducement from any person in authority. Accordingly, they can be acted upon despite retraction.